Working Toward the Mobility Society of the Future

Message from the President The Source of Our Value Creation: What Makes Us Toyota Value Creation Story: Working toward the Mobility Society of the Future Business Foundations Corporate Data for Value Creation >Message from the CSO > Roundtable Discussion with the Outside Directors > Dialogue with Institutional Investors on Corporate Governance > Corporate Governance Message from the CFO > Capital Strategy > The Environment > Vehicle Safety > Quality and Information Security > Intellectual Property and Privacy > Value Chain Collaboration >Human Rights Diversity and Inclusion >Human Resource Development >Health and Safety and Social Contribution Activities Risk Management and Compliance Corporate Governance Fundamental Approach Toyota regards sustainable growth and the stable, long- term enhancement of corporate value as essential manage- ment priorities. Building good relationships with all stakeholders, including shareholders, customers, business partners, local communities, and employees, and consis- tently providing products that satisfy customers' needs are key to addressing these priorities. To this end, Toyota con- stantly seeks to enhance corporate governance. Corporate Governance Report Securities Report > Business Execution and Supervision Toyota's Corporate Governance Contributing to society through monozukuri (manufactur- ing) is the basis of Toyota's corporate value. To enhance its corporate value in the medium- to long-term, it is appropriate for Toyota to be a company with an Audit & Supervisory Board, where internal executives who have been long engaged in and have deep knowledge of manufacturing and outside executives who are capable of providing advice for the creation of new value from a broad perspective can participate in well-balanced Toyota's Corporate Governance Dismissal Appointment/ Appointment/ Dismissal Audit & Supervisory Board Shareholder's Meeting Appointment/ Dismissal Board of Directors decision making at the Board of Directors' meetings. With respect to its framework for executing opera- tions, Toyota has been focused on ever-better car mak- ing since the 2008 global financial crisis, aiming to provide a full lineup of good quality, affordably priced products in the right place at the right time while offering products and services suited to customers in each coun- try and region. To this end, following the introduction of "region-based management" in 2011, the "business unit system" in 2013, and the "in-house company system" in 2016, in 2017, Toyota further clarified that Members of the Board of Directors are responsible for decision mak- ing and management oversight and that operating offi- cers are responsible for operational execution in order to further accelerate the implementation of decisions. Furthermore, in 2018, Toyota brought forward the tim- ing of executive changes from April to January, in order to further accelerate management oversight and ensure full coordination with the workplace. In addition, Toyota trans- formed the company structure into one that enables deci- sion making that is both close to the needs of customers and close to where the action takes place, by taking mea- sures such as reviewing the corporate strategy function and restructuring the Japan Sales Business Group into an organization based on regions rather than sales channels. In 2019, to further advance its "acceleration of (Half of the members are Outside Audit & Supervisory Board (including Outside Directors) Audit Decision making and management oversight Members) Supervision Cooperation Submit/Report Operating officers Operational execution Suggestion Executive Appointment Meeting (Majority of the members are Outside Directors) Executive Suggestion Compensation Meeting (Majority of the members are Outside Directors) management" and the development of a diverse and tal- ented workforce, Toyota made executive and organiza- tional changes as follows: 1. Executives are composed of only senior managing officers and people of higher rank. 2. A new classification called "senior professional/senior management" (kanbushoku in Japanese) grouped and replaced the following titles or ranks: managing officers, executive general managers, (sub-executive managerial level) senior grade 1 and senior grade 2 managers, and grand masters. With an eye to appointing the right people to the right positions, senior professionals/senior manage- ment hold a wide range of posts, from chief officer, deputy chief officer, plant general manager, and senior general manager to group manager, regardless of age or length of employment, in order to deal with management issues as they arise and to thereby strengthen their development as members of a diverse and talented workforce through Genchi Genbutsu (on-site learning and problem-solving). In April 2020, Toyota consolidated the posts of execu- tive vice president and operating officer into the post of operating officer and, in July 2020, clarified the responsi- bilities of operating officers. We redefined the role of oper- ating officer to be members who, together with the president, have cross-functional oversight of the entire company. Furthermore, in-house company presidents, regional CEOs and chief officers, as on-site leaders of Changes in Governance Structure Number of Directors (total) Outside Directors Executive Vice Presidents Senior Managing/ Managing Officers Operating Officers Advisors/Senior Advisors Audit & Supervisory Board Members (total) Outside Audit & Supervisory Board Members Executive Appointment Compensation -2010 2011-2015 business implementation elements, were given authority and consolidated into the rank of senior professionals/ senior management. The roles of operating officers and senior professionals/senior management were determined where and as needed, and persons appointed as operat- ing officers and senior professionals/senior management changed in accordance with the challenges faced and the path that should be taken, as the company exercises greater flexibility than ever in appointing the right people to the right positions. However, because of the rapidly changing business environment, Toyota now recognizes that there is an increasing need for such executives to fulfill management roles (related to people, goods, and money) together with President Toyoda. Therefore, in April 2022, Toyota again reorganized the roles of operating officers and reestablished the position of executive vice president, defining it as an operating officer who is focused on business from a management perspective. Toyota, based on its basic policy of appointing the right people to the right positions, has been swiftly and continuously innovating. We will further press forward with the tide of such innovations, aiming for a corporate structure capable of carrying out management from a viewpoint that is optimal for a global company. 27 2011-2016: between 11 and 16 (temporarily increased due to the introduction of Outside Directors) 2017: 9 2013: 3 2011-2020: between 4 and 7 64 2011-2018: between 42 and 49 2011-2017: between 55 and 68 7 2014: 6 4 2014: 3 2016-2020 Current 2021- April 2022 Position newly established with revised roles (3 persons) August 2022: 7 (Excluding the president and executive vice presidents) 2018: 9 due to organizational changes, July 2020:0 2017: Outside Members accounting for half 2014: Corporate Governance Meeting 2019: Outside Members Compensation accounting for a majority 2018: Sustainability Meeting •Further clarified the responsibilities of Members of the Board of Directors as decision making and April 2017 management oversight and of operating officers as operational execution •Reduced the number of Members of the Board of Directors (including Outside Directors) to 9 (June) October 2017 Changed the system of advisors and senior advisor system Increased the appointment of people with high-level expertise from both within and outside of the Company (the Toyota Group, people with technical backgrounds, etc.) • Executive vice presidents, in addition to supporting the president, personally lead in the field as in-house company presidents and organizational group chief officers Newly established a fellow system to secure people with high level of specialist expertise and expand the breadth of executive human resource development Created a new classification: "senior professional/senior management," encompassing Managing Officers, Executive General Managers, (sub-executive managerial level) Senior Grade 1 and Senior Grade 2 Managers, and Grand Masters •Discontinued use of the Field General Manager rank, shifting to Senior General Manager and Fellow Integrated the roles of Executive Vice President and Operating Officer into Operating Officer •Further clarified the roles of Operating Officers Reorganized the roles of operating officers and established the position of executive vice president to create a position for focusing on management perspectives with the president Accounting Auditor Sustainability 2007-2014: CSR Committee Audit of consolidated financial statements and internal control Audit over financial reporting Business units Head Office In-house companies Labor-Management Council/Joint Labor- Dialogue Management Round Table Conference Reduced the number of Members of the Board of Directors from 27 to 11 members (currently 9 members) April 2011 Reduced decision making layers (discontinued the positions of executives responsible for the operations concerned and introduced a two-tiered arrangement of executive vice president and chief officer) •Made flexible assignment of senior managing officers or Audit Cooperation Cooperation Report Supervision Report managing officers to chief officer posts (abolished the position of senior managing director) January 2018 Sustainability Meeting (Directors and Audit & Supervisory Board Members, including outside members) Established the role of executive general manager • Stationing of, in principle, regional chief officers in their respective regions Established business units January 2019 April 2013 Reorganized regional groups Submit/Report Internal Auditing Department Submit/Report Disclosure Committee Appointed Outside Board Members January 2020 April 2020 Changed the roles of officers April 2015 April 2016 July 2020 Enhanced diversity (appointing non-Japanese executives and female executives) • Established in-house companies, shifted from functional to product-based focus April 2022 TOYOTA MOTOR CORPORATION 35 INTEGRATED REPORT